The Japanese government has greenlit a legislative amendment that would categorize cryptocurrencies as financial products, signaling a significant regulatory shift. By bringing crypto assets under the purview of the Financial Instruments and Exchange Act, the same framework governing stocks and securities, Japan aims to enhance oversight. If ratified during the current parliamentary session, the legislation could come into effect by fiscal year 2027.
Previously, Japan regulated cryptocurrencies primarily as a means of payment under the Payment Services Act, focusing on aspects like custody, anti-money laundering, and exchange registration. The proposed rules would introduce a ban on insider trading and obligate issuers to publish yearly disclosures. Furthermore, penalties for operating without registration would increase, with potential prison sentences of up to 10 years and fines reaching 10 million yen. The Securities and Exchange Surveillance Commission would also see its authority expanded to better monitor the market.
According to Minister for Financial Services Satsuki Katayama, this move is intended to 'increase the availability of growth capital in response to evolving financial and capital markets, ensuring fairness, transparency, and investor protection.'